Sociology 340

Neo-Classical Economics

Views actors as rational and independent with a need to consume; focuses on the efficient and optimal distribution of scarce goods and resources; the market is the most efficient means of allocating goods; seeks to open markets and remove trade barriers between countries

Income Effect

↑In real come → ↑ in the demand for environment quality → ↓in pollution

Criticism of the IMF and World Bank

-A multilateral extension of global north views and demands -Loans were attached with conditions -Projects focused on "productive" investments as opposed to "social" investments -Sponsored "western" technology transfers -Became politically powerful, and helped to entrench colonial power dynamics

China's Environment

-China is an interesting case because of its rapid economic success and its sheer size -Although population growth rates have declined, the number of households have increased (More than Canada and Russia) -More smaller households Loss of scales of economy/increased consumption levels Per capita floor size increase- need for more land, pressure on agricultural land

Impact of IMF/World Bank

-IMF and World Bank members are dominated by global north views/opinions -Leadership and missions selected by the US and Western Europe -These are also the largest funders of the project -Is the one dollar one vote premise fair? -How could things be different if the IMF and World Bank were based on the one country one vote model?

The Accelerating of Debt

-In 1970, the fifteen heavily indebted nations had an external public debt of $17.923 billion- which amounted to 9.8 percent of their GNP. By 1987, these same nations owed $402.171 billion, or 47.5 percent of their GNP -Interest payments owed by these countries went from $2.789 billion in 1970 to $36.251 billion in 1987. Debt service, defined as the sum of actual repayments of principal and actual payments of interest made in foreign currencies, goods, or services on external public and publicly guaranteed debt, accounted for 1.5% of their GNP and 12.4% of their exports of goods and services in 1970. -In 1987, those figures had risen 4.3% and 24.9%, respectively.

Debt Crisis: Mexico

-In 1982 Mexico defaulted on their loans, which caused a panic in the financial sector -The loans countries were using to pay on existing debt dried up and other Latin American countries defaulted -Other countries were unable to pay loans due to the end of trade surplus -Some indebted countries had to pay more money on debts to the developed world (banks) and World Bank than on social services -To deal with the crisis Mexico restructured loans

Multi-national corporations

-Size/power relative to developing countries -Foreign direct investment Flow of capital -Bring goods and services to new markets Solar panels in India Medicine TV/internet/cell phones -Peace McDonalds Theory

Environment impact of development

Acid rain, air pollution, soil erosion-food production, 75% of lakes polluted, Yellow River flow, invasive species, socioeconomic damage, health (300,000 deaths), natural disasters

Environmental Sustainability

Cradle-to-cradle Manufacturing -Manufacturing is responsible for the product through entire life-cycle -Create products that are designed for "upcycling" -Technical and biological "nutrient cycles" -No waste, not less waste

Developed/Developing & MECD/LECD

Definition is based primarily on economic indicators such as GDP, GNI or GNI per capita.

Growth Pole Approach

Development of a core region or growth pole. Leading to spread effects benefiting the country as a whole. Could be planned or unplanned. Development of a specific location through agglomeration. (Special Enterprise Zones in China) Propulsive Industry- industries which can stimulate growth... ship building, automobile, hi-tech

Three Gorge Dam

Eco Benefits: Direct reduction in greenhouse gases; waste water management; reforestation; reduced dependence on fossil fuels Eco Problems: Threatens endangered species; shift in ecosystem; increased erosion in areas; sedimentation; change in hydro flows down stream; resettlement of populations

Foreign Aid

Flows of development aid indicated that not all countries are equal. Why would one country receive more aid over another?

Regional Development

Focus on developing the peripheral regions of the country. Attempting to reduce the regional disparities which develop from an uneven development of the core and periphery. Linked to attempting to reduce rural to urban migration, particularly to the primate city of the core. Often investment in improving infrastructure particularly transport and communications to link the region more with the core. This approach has been very popular in Europe and is a major part of the EU budget. Particularly in regions which have suffered from industrial decline or countries such as Ireland, Portugal and Greece.

Concepts of Freedoms

Freedoms are linked together and can strengthen one another. I.E. political freedoms (free speech, elections) promote economic security. Social freedoms (education, health facilities) promote economic participation.

Transnational Players in Global Economy

International Monetary Fund World Bank World Trade Organization Multi-national corporations

What is OPEC?

OPEC is an organization of eleven developing nations, whose economies rely on oil export revenues: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.

Neo-Classical Assumptions

Society is harmonious; economic changes benefit all people/classes: Trickle down theory; change takes place in a linear or evolutionary manner

History and Functions of World Trade Organization

WTO is an international non-profit association dealing with global rules of trade between nations WTO Functions- control trade agreements between member states; organize and ensure trade talks between member states; monitor the trade policies of member states, resolve trade disputes between them Terms of accession: Candidates must adjust their legislation and the practice of their foreign economic regulation to the Uruguay Round agreements Established on Jan 1, 1995 as the legal successor of the General Agreement on Tariffs and Trade which commenced in 1947

What else is being done

-At national levels, too, there is considerable activity. Several countries are coming up with legislation, or other measures, which respond to the above treaties or in other ways deal with the relationship between IPRs and biodiversity -Of particular interest to many countries, especially in the 'developing' world, are the following: Protecting indigenous knowledge (traditional and modern) from being "pirated" and used in IPR claims by industrial or commercial interests Regulating access to biological resources so that historical "theft" of these resources by the more powerful sections of the global society can be stopped, and communities and countries are able to gain control and benefits from their use

Major Environmental Issues

-Climate changes -Global warming "Greenhouse effect"- thawing of icebergs, precipitation change, droughts and floods, sea-level increase -Ozone layer -Acid rain -Biodiversity erosion -Global health problems -Global waste -Negative externalities of human activity

Commercial side of Biodiversity

-Commercial interest sees biodiversity as potential resource for improved medics and pharmaceuticals Pain killers from tree frogs Anti-biotic Enzymes to produce drugs -Gates foundation Shift towards development of drugs to aid developing countries Malaria medication based on indigenous knowledge

Post-modernism (Alternative approached to development)

-Critiques the entire development community and modernization -Those with power can control info and development -View development as the spread of hegemonic monoculture -Reject the notions of meta-narratives: (an abstract idea that is thought to be a comprehensive explanation of historical experience or knowledge... things can happen twice the exact same way) -Developing countries need new alternatives to development -Saying that everyone in the world can live the American dream is a lie, and isn't necessarily the best thing for all people -Development should be based on indigenous values, knowledge and needs *All truth is relative*

Effects on SAP on Mexican Population

-Debt regime eliminated social programs targeting health and nutrition resulting in increased malnourishment -Minimum wage fell 50% between 1983 and 1989. -The number of households in extreme poverty reached 17 million -Economic shift away from manufacturing to cash crop exports

Technological Transfer

-Do counterfeit capitals develop into innovation centers? -If so does TRIPS block an important step in economic development? -If the US was able to use it to develop, why shouldn't other countries?

"The Trojan Horse" Spiraling Inflation

-During the 1970s and early 1980s, the world experienced spiraling inflation that drove up interest rates. Loans that might have been affordable when the cost of borrowing was 5% became totally unsustainable with rates between 10 and 15%. Inflation- a rise in the general level of prices, as measured against some baseline of purchasing power.

What makes globalization

-Economic Factors Transnational corporations Integrated financial markets -Global flow of information and communication -Political changes

Solutions (Bad Development/Environment)

-Enforce environmental laws and treaties -Use free market tool to resolve environmental issues End subsidies on damaging industries Environmental and emission taxes -Focus on both populations size and consumption levels -Investment in educations -Conserve biodiversity

Environmental policies

-Environment policies pursued by governments reflect the relative value the society places on environment -The costs of complying with environmental regulations have been steadily increasing. This makes complying more difficult for the global south.

Effects of the food aid

-Erosion of peasant food Flood of US wheat damaged local grain Change in diet -Loss of peasant,small scale subsistence farms -Rise of industrial work force

Dependency Theory

-Examines how individual actors (individuals, states etc) function in various structures and systems -Capitalist structure exacerbates unequal relationships between wealthy and poor countries (Think of power dynamics) -Reject neo-classical approached to development, and often see it as neo-colonialism -Underdevelopment is a created condition -There is not a linear transition to modernity -Predicated on the notion that resources flow from a "periphery" of poor and underdeveloped states to a "core" of wealth states, enriching the latter at the expense of the former. -Periphery states are impoverished and core ones enriched by the way peripheral states are integrated into the "world system" -Often based on Marx's analysis of inequalities within the world system -Not just at the national state level.. class is important. Elites from core countries partner with elites from peripheral countries exploit peripheral countries for labor and resources

Global political changes

-Fall of communist regimes -Rise of IGOs and INGOs -Rising importance of international coalitions (the EU, UN, etc)

Third World Countries

-First used in 1955 at the Bandung Conference in Indonesia: Nehru of India and Sukarno of Indonesia were the main leaders at this conference -Third world was used as stance of non-alignment during the Cold war. Not a rank or order of national wealth. Capitalistic countries = First worlds, Socialist countries = Second world

The bias of developed countries

-Fredrick Lich, "he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him."

Globalization and social change

-Globalization is the process through which the world is increasingly connected and interdependent. At level of individuals, groups, organizations, states, and so on This process is largely associated with economic and political change -In the modern period, globalization has accelerated rapidly

Debt regime and global governance

-How did the debt crisis and loss of sovereignty increase the power of transnational organizations like the WTO, Work Banks, and IMF? -The global north and south power dynamic was further entrenched by a number of international treaties.

Loans not grants for development

-In 1957, the U.S. decided that instead of providing grants, it would provide low-interest loans as a form of aid to developing countries. -The rationale for this decision was that these investments would generate sufficient wealth to then pay for themselves. Many other countries followed suit with this form of aid.

Results of the International Debt Crisis

-In response to the inflation of the developing countries debts, many nations threatened to default their loans. -However, if this were to occur, it would put into jeopardy many of the North American, European, and Japanese banks who lent them the money. This would lead to an economic crisis in the developed world. -For this reason, organizations such as the World Bank and International Monetary intervened and "allowed" the developing countries to reschedule their debts.

OPEC Oil Crisis

-In response to their profits, the OPEC nations had vast sums of money to invest, and deposited it in banks in North America, Europe, and Japan. -These banks had to find customers to borrow this cash. The world's developing countries became more than willing customers for loans that had low, but floating interest rates. -In reality, a major reason why these countries had to borrow money was to pay for the oil they needed, which was dramatically more costly. -When a country uses loans to pay for day-to-day needs like oil, little capital is left over for economic development. These oil purchases, of course, enriched the oil exporters even more.

Abolition of U.S. Gold Standard

-In the 1970s, the US went off the gold standard. This meant that the value of the dollar was no longer tied directly to the value of gold, and created a great deal of uncertainty in world financial markets. -As a result, the OPEC felt that the lower value of the dollar was costing them too much money. In response, they increased the price of oil by 70 percent. Additional significant oil price increases occurred in 1979.

IP Rights

-In the 1990's a range of significant developments related to IP rights and biodiversity. -At least 2 major international agreements, both legally binding, deal with this issue: 1. The Convention on Biological Diversity- an international treaty that was adopted in Rio-de-Janeiro in June 1992 2. Agreement on TRIPs of the WTO- was negotiated at the end of the Uruguary Round of the General Agreement on Tariffs and Trade (GATT) in 1994.

Good & Bad Development

-Increased food imports have reduced domestic use of pesticides and fertilizer -Some pollution intensive industries have moved into China -$16,988-$50 billion in production -Government focused on economy then environment -Low investment in education means low public awareness of environmental problems and solutions -China is moving from high labor to high capital, development of green energy

How we feel about globalization

-Increasing need to construct our identities -Significant shifts in work and family life -Ubiquity of Western- especially American-popular culture

Bretton Woods Agreement

-Meeting attended by 44 financial ministers to discuss rebuilding the global economy -Created the World Bank and International Monetary Fund -Bretton Woods agencies were to: Stabilize national finances and revitalized international trade (IMF) Aid economic development Create revenue to purchase global north goods

Debt Regime

-New era of global governance in which individual countries were subjected to the external control and policies of the global north through international financial institutions like the IMF and World Bank. -New loans were given to help service existing loans -These new loans were conditional on the acceptance of structural adjustment policies (SAP)

Marshal Plan/Bretton Woods

-Post depression and WWII, the US turned its focus outward, and the development project was shaped by the Marshal Plan and Betton Woods agreement -The Marsh Plan was focused on rebuilding Europe -Populations were discontent about the unstable economic and political environments -US hoped financial aid would help stabilized populations and facilitate economic growth in strategic areas of the world

Linking globalization and social change

-Responding to environment factors -Emergence of the political state -New communication technologies -Religious pluralism and the need for tolerance -Expansion of industrial capitalism

World Bank

-The World Bank is a vital source of financial and technical assistance to developing countries around the world -We are not a bank in the ordinary sense, but a unique partnership to reduce poverty and support development. We comprise two institutions managed by 188 member countries: the International Bank for Reconstruction and Development and the International Development Association. The IBRD aims to reduce poverty in middle-income and creditworthy poorer countries. These institutions are part of a larger body known as the World Bank Group. -We provide low-interest loans, interest-free credits, and grants to developing countries -We offer support to developing countries through policy advice, research and analysis, and technical assistance.

Lost Decade

-The debt crisis and restructuring resulting in the loss of economic growth from most developing countries -Collectively debtor countries entered the 1990s with 61% more debt than they had in 1982. -A big turning point was 1984 when the net flow of capital reversed from positive flow going from the global north to the global south, to net flows going from the global south to the global north. -Many countries were paying more on debts than social services.

Effect of Pollution

-The net effect on domestic pollution, deriving from the opening of any individual country to world commerce, is determined by the configuration of three basic factors within the country itself: 1. Environmental policies implemented by its government 2. Income 3. Comparative advantages

Declining Currency Value

-To make matters worse, throughout this whole period, as the economies of debtor nations declined, their currencies lost value compared to hard currencies like the US dollar and the Japanese yen. -If the currency lost half of its value compared to US dollars (and many lost much more than that), the debt load doubled in terms of local currency. -To add to the growing economic mess, the price of many of the commodities that the developing countries relied on for export earnings (agricultural, forestry, and mining products) declined in the 1970s and early 1980s.

What is TRIPS

-Trade-Related Intellectual Property Rights -Intellectual property flows from North to South -Rents go from South to North -Lack of research done on issues related to problems in the South -North needs returns on investments and help with additional innovations

Rise of food aid regime

-US agro-industrial model lead to the rise of mono-cropping -Farmers supported by government subsidies would over produce, and result in a surplus -This surplus was then used as food-aid in the global market

Development Project

-Universal claims (dev= rising standards etc) -Nation-state provides the framework for development -Aid binding developed and less developed countries Entrenched existing power relationships Positive economic and political relationships -Growth strategy focusing on industrialism Agro-industrialism, rural/urban divide -New inequalities embedded along regional, class, gender and ethnic lines

Modern technology and social movements

-Use of internet for organization and fundraising -Speeds up the process with instant info and response -Allows for fast coordination of events like rallies, protests, and son on -Could indicate a shift in power

Three forces drive globalization

1. Universalism- seeks truth that applies to all times and places 2. Imperialism- the notion that developed nations can help and exploit less developed nations 3. Capitalism- the search for surplus value... Market forces= a drive to find cheaper and more efficient ways of producing goods for sale and consumption

Downside to SAP

Although SAPs may help a country become more competitive in the global arena, they can harm the poor. This happen when: -Social expenditures (especially for health, education, and welfare) are cut back in order to to meet targets for reducing fiscal deficits -Public sector employees are dismissed in government downsizing without retraining or other economic opportunities -Local companies close in the face of competition from abroad -New investment is slow and does not create jobs at the rate expected -Suppressed wages to attract foreign investors

Export led growth

Economic growth through the production and export of product which the country has a comparative advantage at producing. Approach adopted by many East and South-East Asian countries particularly successful in Taiwan where most of the enterprises were Taiwanese not foreign owned. There can be significant state involvement in the form of investment, subsidies and protectionist measures. Potential problem of dependency on key products and problems if export markets drop. Ivory Coast- cocoa... China- GDP growth slow down because of USA recession

Foreign Direct Investment

Encourage foreign companies to locate in the country to stimulate economic growth. The foreign companies would provide the investment the economy needs. Policy encouraged by the World Bank. Particularly significant in extractive industries such as mining and oil where the initial costs are very high. I.E. Nigeria oil, Bolivia silver... Some protection of domestic industries needed. Just opening economy to foreign competition will mean even profitable and sustainable industries will be unable to survive in the initial periods... High levels of FDI in China's special enterprise zones.

Concepts of Freedom - Evaluation and effectiveness

Evaluative Reason- assessment of progress has to be done primarily in terms of whether the freedoms that people have are enhanced Effectiveness Reason- achievement of development is thoroughly dependent on the free agency of people

Globalization in everyday life

Examples: IKEA furniture, Wii games, H&M fashion, L'Oreal shampoo and beauty products, Samsung cell phone, Birkenstock sandals, Diesel jeans, Apple iPhone, American Express credit card

Instrumental Freedoms

Political- civil rights, free speech Economic facilities- utilization of resources for consumption, production, exchange Social opportunities- education, health care Transparency guarantees- openness and freedom to deal with one another, guarantees of disclosure Protective security- unemployment assistance, famine relief

Poverty and Capability Deprivation

Poverty must be seen as the deprivation of basic capabilities or lack of freedoms.. Advantages of Capability Approach- Income is not the only instrument in generating capabilities. Impact of income on capabilities is contingent and conditional

European Cows

Primary farm producers in the world's developed countries receive about $280 billion a year in government support. In the European Union, farmers receive a third of their income from government subsidies. Beef and veal producers get more than 70% of their income from subsidies. A typical cow in the EU receives a government subsidy of $2.20 a day. The cow earns more than 1.2 billion of the world's poorest people.

Concepts of Freedom- Freedom includes

Processes- allow freedom of actions (voting privileges, political and civil rights) Opportunities- available to people given their social circumstances (capability to escape premature mortality, involuntary starvation)

"Trickle Down" Approach

Proponents of this approach would argue that richer individuals and larger companies are the driving force behind economic growth. The wealth created by the more successful parts of the economy and more successful people will naturally trickle down and benefit everyone. Therefore, the country should focus on ensuring the right environment for the rich and the larger companies to thrive. Low taxation and lack of regulation.

Structural Adjustment Policies (SAP)

SAPs are designed to: -Stabilize faltering economies by reducing inflation and correcting the balance of payments -Increase growth by making economies more productive and efficient and by opening them to market forces -Major elements in structural adjustment programs typically include: -Raising taxes to increase government revenue and balance the budget -Eliminating price and interest rate controls -Reducing the size and scope of government and privatizing state-owned enterprises -Reducing tariffs and other restrictions on foreign trade -Reducing regulations on businesses and on capital flows to encourage local and foreign investment

Infringement on Bio-diversity

Some feel these resources are being stolen -The patenting of ancient herbal remedies, I.e. the US patent given to the healing properties of turmeric, known for centuries to Indians -US plant patent on the 'ayahuasca' plant, considered sacred and used for medicinal purposes by Amazon's indigenous people -The patenting of crop varieties which are similar to those grown for centuries in certain geographical areas, i.e. for varieties of Basmati rice by Rice-Tec Corporation in the US

IMF

Started after WWII to help stabilize currencies and international finance The IMF supports its members by providing: -policy advice to governments and central banks based on analysis of economic trends and cross-country experiences -research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets -loans to help countries overcome economic difficulties -concessional loans to help fight poverty in developing countries -technical assistance and training to help countries improve the management of their economies

"Top Down" Approach

Tends to centralize decision making and is often linked to development through large scale "prestige" projects

"Bottom Up" "Grass Roots" Development

The aim is to lift people out of poverty by helping them directly. Helping them help themselves. Local involvement in the decision making process. Identifying their needs and deciding on the most effective solution. Use of appropriate technology. Generally long term aims of sustainability. Sanitation and water supply, improved farming through use of appropriate technology, education, health care improvements and family planning, development of local industries and businesses through micro loans and the reduction in bureaucracy, improved marketing and access to markets, land and property rights, access to enabling technologies like internet and cell phones

Environment can be viewed as:

The complex of physical, chemical, and biotic factors (as climate, soil, and living things) that act upon an organism or an ecological community and ultimately determine its form and survival The aggregate of social and cultural conditions that influence the life of an individual or community

Rostow's Theory of modernization

Traditional Society (Limited technology, static society) --> *Transition triggered by external influences, interests, or markets* --> Preconditions for Take-off (Commercial exploitation of agriculture and extractive industry) --> *Installation of physical infrastructure (roads, railways, etc) and emergence of social/political elite*--> Take Off (Development of a manufacturing sector) --> *Investment in manufacturing exceeds 10% of national income; development of modern social, economic and political institutions* --> Drive to Maturity (Development of wider industrial and commercial base) --> *Exploitation of comparative advantages in international trade* --> High-mass consumption